Many San Diego small businesses say they're facing closure and won't survive another lockdown without more stimulus money.
NBC 7 Investigates also learned that those businesses likely won’t find much refuge in the city’s business relief fund – as its stash of stimulus money for small business has almost run dry, too.
NBC 7 first met Signature Towing owner Larry White back in April. His Chula Vista business was among nearly 5 million companies that received a forgivable federal coronavirus relief loan through the Paycheck Protection Program. The SBA rolled out the loans as a part of the $2 trillion CARES Act passed by Congress in March.
“When you’re a real small business like me,” White said on Tuesday, “it’s chump change. It helps, but it’s chump change.”
With few employees on the payroll, his business only received $9,000.
“Nine thousand dollars is not a lot of money," White said. "I mean, that’s not even a month’s worth of bills in this business. But it kept us going.”
Around the same time NBC 7 first spoke with White, we also met Laura Rogers.
Rogers, who owns Fury Functional Fitness in Clairemont Mesa, also got a PPP loan.
”There is no part of me that takes that for granted,” Rogers said. “It has kept me alive. But that money went really fast.”
Rogers wound up getting $14,000.
“That doesn’t even cover two months of my rent,” Rogers said. “I don’t want to sound like I’m not grateful. I just don’t think we expected -- when we applied for it -- that we would still be closed in November.”
Rogers and White are far from alone.
In fact, a recent Goldman Sachs survey found that more than 8 in 10 business owners ran out of the PPP money by the first week of August.
“Obviously there’s a problem,” said Carnegie Mellon finance professor Chester Spatt, Ph.D., who formerly served as a chief economist for the U.S. Securities and Exchange Commission.
Spatt summarized the major criticisms of the PPP into three main points:
- Congress designed the PPP only to only cover 4-6 months of the pandemic. The CARES Act was passed seven months ago
- Initially, 75% of the PPP loan had to go toward payroll in order for the SBA to forgive it. That number was later reduced to 60%. But for many businesses, other costs like rent, insurance and equipment exceed payroll (“I think the reality is it would have been more helpful to workers had it had more flexibility,” Spatt said)
- There was no targeting of funds toward businesses most impacted by the pandemic, such as hotels or restaurants. Airlines did receive a significant portion of CARES Act funding, but that wasn’t under the PPP, which did not allocate particular amounts for any particular sectors
“I think the reality is without it, a lot of the small businesses would have closed,” Spatt said. “But a lot of them closed anyway. Now more of the survivors will close.”
Spatt said that's especially likely if Congress doesn't pass another stimulus bill soon.
“There’s been a lot of gamesmanship on both sides of the aisle, frankly,” Spatt said.
The city of San Diego routed some of its CARES Act money to small businesses.
This week, NBC 7 Investigates checked in with the city, which doled out more than $20.5 million for small business relief. A city spokesman said that most of that money ($17 million) has been granted to 2,300 businesses.
The problem is, more than 10,000 businesses applied.
“Our politicians are doing nothing for us,” White said. “Absolutely nothing for us.”
White and Rogers said more businesses would be on board with another lockdown if there was more financial relief on the way.
“When or if we lock down again,” Rogers said, “I don’t know how I will survive that.”
“It wasn’t my decision to shut this down,” White said. “It was our state, our local government. We didn’t do this. The government owes it to us and owes it to all the small businesses to help us and keep us alive. They owe it to us.”
Spatt said there is some hope. Congress must pass a new federal budget by Dec. 11, and Spatt believes there is a possibility they may include another stimulus deal in that bill.